Debtor Rehabilitation and Bankruptcy Act
The Debtor Rehabilitation and Bankruptcy Act consolidates and modernises South Korea’s insolvency framework. Enacted in 2005, the Act provides comprehensive procedures for corporate and individual rehabilitation, liquidation, and reorganisation. It established a debtor in possession model for rehabilitation and created provisions for personal bankruptcy and fresh start.
Legal area: Law governing the resolution of debtor insolvency and business restructuring.
Year enacted: 2005
Key Provisions
- Part I: General provisions (definitions, jurisdiction)
- Part II: Rehabilitation (commencement, plan, confirmation)
- Part III: Corporate reorganisation (large enterprise restructuring)
- Part IV: Bankruptcy (liquidation, distribution)
- Part V: Individual insolvency (personal bankruptcy, discharge)
- Part VI: Cross-border insolvency
Significance
The Debtor Rehabilitation and Bankruptcy Act consolidated previously fragmented insolvency legislation into a comprehensive framework. The Act’s rehabilitation provisions have been used by large and medium enterprises to restructure while continuing operations. The personal bankruptcy provisions provide a fresh start mechanism for individuals. South Korea has been working to improve the efficiency of insolvency proceedings and to reduce the stigma associated with bankruptcy.